Risk Study: Manufacturers more worried about recovery than recession
According to an AMR Research study, 44 percent of respondents believe the recovery cycle is the biggest risk in 2010 because of potential commodity price increases, limited internal skills after workforce reductions, and problems meeting new demand with constrained capacity, low inventory, and transportation constraints; only 23 percent are worried that the recession will continue, resulting in weak customer demand.
AMR Research has released a report on risk in U.S. manufacturing and retailing, and one of the more interesting findings is these organizations are more worried about recovery than a continued recession in 2010.
According to the study, 44 percent of respondents believe the recovery cycle is the biggest risk in 2010 because of potential commodity price increases, limited internal skills after workforce reductions, and problems meeting new demand with constrained capacity, low inventory, and transportation constraints; 23 percent of respondents are worried that the recession will continue, resulting in weak customer demand.
The report includes additional data on where companies source and manufacture and why, what the biggest risks are, and how to mitigate them. For example, the top three supply chain risks this quarter are: supplier product quality failures (31 percent), commodity price volatility (30 percent), and IP infringement (30 percent), says AMR.
Twelve percent of manufacturers indicated that more than half of their suppliers have experienced disruptions that impacted their ability to serve them. And, although piracy made the news in the first half of 2009, only 2 percent of companies are worried about its impact on business.
When it comes to manufacturing sourcing issues, the report reveals that 44 percent of companies source from and manufacture in the U.S., while 15 percent source from and manufacture in China. Companies are continuing to look nearshore for sourcing and manufacturing (11 percent of respondents), with four times as many respondents planning to increase this activity versus decrease.
Respondents cited the U.S. (33 percent), China (26 percent), and Latin America (14 percent) as contributing the most risk to their supply chains. This is attributed to the volume of activity in each region, as well as inherent risks. China contributes the most risk in 11 out of 15 categories, while the U.S. contributes the most risk in 3. The two tie in one category.
Over the past year, using nearshore regions for sourcing/manufacturing has been the fastest growing risk mitigation strategy; 38 percent of respondents say an increase in cost competiveness is behind this shift. Supplier management is the most successful technology used to mitigate risk (23 percent report so), with inventory optimization (17 percent) and sales and operations planning tools (17 percent) following.
Click to find out more about the AMR Research 2009 report on report on risk in U.S. manufacturing and retailing .
- Edited by Renee M. Robbins, managing editor, MBT www.mbtmag.com